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Question
When shares are issued to promoters for the services offered by them, the account that will be debited with the nominal value of shares is _______.
When shares are issued to promoters for the services offered by them, the account that will be debited with the nominal value of shares is _______.
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Solution
The correct option is B Goodwill
Promoters are the person who are responsible for buying the left shares of the company.The promoters are paid by issuing the shares under their name but a specific account is not created for them. Since their only motive is to raise the business and can be considered as raising the goodwill of the firm.The company act 2013 explains that when shares are issued in the name of promoters the account debited under company records is Goodwill account.The Goodwill account is created when shares are issued to promoters since it is is an incorporation cost and this cost is nothing but the good image of the firm.
Promoters are the person who are responsible for buying the left shares of the company.
The promoters are paid by issuing the shares under their name but a specific account is not created for them. Since their only motive is to raise the business and can be considered as raising the goodwill of the firm.
The company act 2013 explains that when shares are issued in the name of promoters the account debited under company records is Goodwill account.
The Goodwill account is created when shares are issued to promoters since it is is an incorporation cost and this cost is nothing but the good image of the firm.
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